Ponzi Schemes - Law Offices of Robert Wayne Pearce

Apr 9, 2025

Investors Nationwide Beware of Affinity Fraud Schemes That Target Member Groups!

Affinity fraud exploits the trust and friendship that exist in groups of people who have something in common. Some of the common interests include a religious beliefs, ethnic groups, immigrant communities, racial minorities, and members of a workforce. Various methods are used to access or target the groups. One common way is to persuade leaders from within to endorse the scheme. Sometimes the leaders do not even know that they are endorsing a scam, and they may end up becoming one of the victims of the fraud themselves. Because of the tight-knit structure of some of the groups, it can be quite challenging for regulators or law enforcement officials to detect affinity scams. Fraud victims often fail to notify the authorities in time, or they will try and work things out internally. This particularly true where the fraudsters have used respected community or religious leaders to convince members to join in on the investment.

Apr 9, 2025

Ninety-Six Broker-Dealers Sued for Commissions Generated from Tenant-in-Common Ponzi Scheme

Mr. James Zazzali, trustee for the DBSI Inc. bankruptcy, is suing ninety-six broker-dealers to recover $49 million in commissions for securities fraud related to tenant-in-common investments (TICs). In the complaint, Mr. Zazzali alleged that DBSI’s TIC deals were part of a $600 million Ponzi scheme. Mr. Zazzali contends that the broker-dealers should return investors’ payments and commissions, which should be distributed to DBSI creditors.

Apr 9, 2025

SEC Pursues ex-Money Concepts Florida Broker “Buddy” Persaud for Ponzi Scheme

Gurudeo “Buddy” Persaud, an ex-Money Concepts registered representative, is being charged by the Securities and Exchange Commission (SEC) for running a Florida based Ponzi scheme. An SEC investigation revealed that Mr. Persaud accumulated close to $1,000,000.00 from family and friends by promising them 6-18% returns with little to no risk. What his clients did not know was that Mr. Persaud’s investment philosophy was based on the earth’s gravitational forces and its effects on the valuation of stock prices. He also believed that the moon could influence investors to sell their stocks. In addition, Mr. Persaud hid his involvement in his own company, White Elephant Trading Co., by acting as an independent advisor that sold investments in White Elephant to his clients in contract form. The SEC is seeking to recoup Persaud’s gains, obtain injunctive relief, and impose financial penalties against him.

Apr 9, 2025

Universities Not Spared from Ponzi Scheme Epidemic

A Texas based money manager has been charged with running a Ponzi scheme that defrauded the Houston Athletics Foundation, a University of Houston entity which funds athletic scholarships. David Salinas, who took his life after the Securities and Exchange Commission (SEC) filed a suit against him and his associate Brian Bjork, was charged with perpetrating a $39 million Ponzi scheme that involved over 100 investors, which included high-profile college coaches. A Ponzi scheme is an unsustainable fraud pyramid that inevitably ends in ruin. Schemers use money raised from latter investors or investors higher up the pyramid to pay an earlier investor’s returns. Ponzi schemes invariably fall apart when markets deteriorate or when the schemer is unable to raise more cash. Around $2.2 million of the Foundations assets, having supposedly been invested in bonds, are still unaccounted for.

Apr 9, 2025

AXA Advisors Fined $100,000.00 for Not Firing Broker Who Ran a Missouri Ponzi Scheme

AXA Advisors has been fined $100,000.00 by the Financial Industry Regulatory Authority (FINRA) for not investigating and firing a broker who was running a Ponzi scheme, which dates back to 2001. Kenneth Neely began to work with AXA Advisors in Clayton, Missouri in 2007 before FINRA permanently barred him from the financial industry in 2009. Mr. Neely’s Ponzi scheme defrauded investors out of $600,000.00 who for the most part belonged to a church and were led to believe they were investing in a real estate investment trust. Be that as it may, AXA was aware of Mr. Neely’s fraudulent activity in 2008 when AXA conducted a yearly audit of him, which revealed a spreadsheet with investor payout information. Mr. Neely falsely claimed that the figures were for a client who wanted to start and budget a business. Mr. Neely eventually pled guilty to mail fraud and converting and commingling funds. Mr. Neely was fired by AXA Advisors in 2009.

Apr 9, 2025

Texas Ponzi Schemes: Investors Sue Morgan Stanley Smith Barney and Provident Royalties

11 investors in Dallas, Texas are suing Morgan Stanley Smith Barney and one of its financial advisers, Delsa Thomas, for running a Ponzi scheme. A Ponzi scheme is an unsustainable fraud pyramid that inevitably ends in ruin. Schemers use money raised from latter investors or investors higher up the pyramid to pay an earlier investor’s returns. Ponzi schemes invariably fall apart when markets deteriorate or when the schemer is unable to raise more cash. The investors alleged that Ms. Thomas took advantage of their trust by suggesting that they invest in Tejas Eagle Financial LLC; Ms. Thomas established an investment range of $125,000.00 to $250,000.00, which was made up of her investors’ retirement and savings money. Investors also contended that Ms. Thomas’ recommendation was unsuitable and was bound to destroy whatever amount they had invested and that Morgan Stanley Smith Barney breached its duty of care by allowing her to give investment advice that was unsuitable. Damages are being sought under vicarious liability, fraud, negligent misrepresentation, and negligent supervision.

Apr 9, 2025

Florida TD Bank Aided and Abetted Rothstein in Ponzi Scheme

A jury has awarded Texas-based Coquina Investments $67 million against TD bank for its involvement in Scott Rothstein’s $1.2 Billion Ponzi scheme. Scott Rothstein, the once-high flying South Florida attorney, pleaded guilty in 2010 for defrauding investors out of $1.2 Billion from 2005 to 2009. Mr. Rothstein told investors that they were purchasing interests in settlements involving sexual and employment discrimination, which was later discovered to be a sham. Coquina alleged that TD Bank officers assisted Mr. Rothstein by meeting with victims and telling them that the business was legitimate and that the scam could not have worked without TD Bank’s assistance.

Apr 9, 2025

SEC Charges Jason J. Konior and the Absolute Funds Over Alleged $11M Ponzi Scheme

The Securities and Exchange Commission has filed charges against fund manager Jason J. Konior and his Absolute Fund Management and Absolute Fund Advisors for running a Ponzi-like investment scheme that was supposed to maximize investors’ profits and instead allegedly funneled $2 million of clients’ money to pay for earlier investors’ redemption requests, as well as business and personal expenses. The SEC is charging Konior and his two firms with violating the Securities Exchange Act of 1934’s antifraud provisions. The Commission is seeking financial penalties, permanent injunctive relief, and disgorgement of ill-gotten gains.

Apr 9, 2025

Michael Palazzo Fixed Income 1 Fund Investigation by Robert Wayne Pearce, P.A.

The Law Offices of Robert Wayne Pearce, P.A. is currently investigating an alleged Ponzi scheme perpetrated by Michael Palazzo, a former Tonawanda, New York based stockbroker at Berthel Fisher & Company Financial Services, Inc. Mr. Palazzo’s former customers are alleging that he fraudulently solicited investments in Fixed Income 1 Fund as a part of his plot to misappropriate funds. Sales practice allegations by customers against Mr. Palazzo and his employer have been filed. The Financial Industry Regulatory Authority (FINRA) recently reported a June 3, 2013 complaint made by former customers inquiring whether the investments they made through Mr. Palazzo were legitimate. FINRA also reported a June 7, 2013 complaint by former customers against Mr. Palazzo alleging churning, misapppropriation of funds, and a misrepresentation related to the terms of a variable annuity contract. In addition, the June 7, 2013 complaint alleged that Berthel Fisher & Company Financial Services failed to supervise Mr. Palazzo’s activities.

Apr 9, 2025

Have You Lost Money In A SunLife Or AIG Life Insurance-Dedicated Fund?

SunLife Insurance Company (SunLife) and AIG Life Ins. Co. (AIG), and other insurance companies have been engaged in the offer and sale of variable annuities and variable life insurance policies that are really investments in highly speculative hedge funds and private equity funds. These hedge funds and private equity funds are known as “insurance-dedicated funds.” The manner in which these insurance-dedicated funds have been sold could be viewed as a false and misleading sales practice. Many investors may have been misled as to the relative safety of their investment when they bought what appeared to be a safe insurance type product that had been fully vetted by an insurance company.